By

Paul Johnson

May 10, 2024

Using a Master Vendor for Marketing Partnerships and Productions

Introduction:

Managing marketing freelancer relationships from influencers and affiliates to UGC creators and live event staff can be challenging. Marketing teams often work with hundreds of these freelancers every year across a number of projects, and each one needs to be set up as a vendor, submit invoices for approval and ultimately have payments processed by finance. This coordination takes a lot more time and effort to manage than expected. Every small error in the onboarding, invoicing or payment process leads to delays and  requires several emails and days to solve. 

Working with a master vendor means marketing and finance can work through one vendor instead of managing hundreds of long tail vendors. Marketing has more visibility over payouts and ultimately spends less time on vendor support. This article dives into how working with a master vendor can streamline operations, improve speed and control, and alleviate common pain points when working with influencers, affiliates and other marketing freelancers.

What is a Master Vendor for Marketing Teams?

The master vendor acts as a central hub for managing relationships with all the various freelancers and vendors a marketing team works with. Instead of businesses needing to deal with hundreds of individual vendors, the master vendor consolidates all these interactions, offering a single point of contact for vendor management and invoicing. The master vendor provides full visibility, payment setup and approval workflow and reconciliation. A master vendor is better than working through finance systems because both marketing and finance can have access to the master vendor platform. This approach simplifies administration, reduces overhead, and enhances visibility and control over vendor spend.

Why use a Master Vendor when Working with Freelancers?

Working with a multitude of small-scale vendors often involves a slew of administrative tasks, from setting up freelancers to ensuring accurate invoices and coordinating payments. These challenges are often amplified for Marketing freelancers like Tiktokers and UCG (user generated content) who typically are younger and less business savvy.

There are 5 key ways working with a master vendor helps when working with freelancers: 

  1. Vendor onboarding

  2. Tax compliance 

  3. Budgeting and spend controls

  4. Payments and accounting

  5. Vendor relationships

1) Vendor onboarding

Status quo:
The setup and support process for marketing vendors is cumbersome, often requiring hundreds of hours of administrative work and troubleshooting in systems like Ariba, Coupa, Apax Analytics.

With Master Vendor:
Master vendor takes on and streamlines vendor setup and support, saving hundreds of hours. Working through a master vendor as a single point of contact eliminates time spent on administrative tasks.

2) Tax Compliance

Status quo:
Handling tax documentation, such as W-9s and 1099 filings, for numerous vendors can be error-prone, risky, and time consuming. During audits, this process becomes even more challenging, often leading to compliance issues.

With Master Vendor:
Master vendor takes responsibility for all tax compliance, including W-9 collection and 1099 filings. This centralized approach ensures compliance and reduces errors, freeing bandwidth for both marketing and finance teams.

3) Budgeting and Spend Controls:

Status quo:
It is difficult to manage budgets across multiple projects with multiple vendors, and ensure that invoices all map against purchase orders. Marketing typically does not have access to financial systems and needs to maintain a separate source of truth in spreadsheets.

With Master Vendor:
Master vendor enables budgeting at the project level which easily maps to a single purchase order. Marketers can spend from defined budgets with autonomy while finance has complete visibility and control of spend.

4)Payments and Accounting:

Status quo:
Receiving, reviewing, and approving individual invoices is time-consuming. Marketing lacks access to finance systems and has limited control over when vendor payments are sent. Multiple employees touching payments without clear oversight exacerbates this issue. Individual payouts must be entered into accounting system.

With Master Vendor:
Master vendor eliminates the need to collect invoices by (1) consolidating invoicing at the project level and (2) integrating with existing marketing & finance workflows. Granular user permissions and audit trails enable cross-functional visibility while minimizing risk. Account entries can be simplified to campaign or project level.

5) Vendor Relationships

Status quo:
When any issue happens from vendor onboarding to late payments to receiving 1099s, vendors are frustrated and take it out on their marketing point of contract. Resolving issues takes time and involves multiple people across both marketing and finance.

With Master Vendor:
Master vendor streamlines the entire process to reduce potential issues. Master vendor provides dedicated support to quickly resolve any potential issues with freelancers.

Alternatives to using a Master Vendor

Outside of managing manually (aka the status quo) through an ERP or accounting software, there are alternatives to a master vendor which companies choose when working with freelancers. Each alternative has cons and pros:

1) Work with an agency

Hiring an agency as a single vendor to manage freelancers can offer many benefits like the ability to tap into an established network of influencers and expertise in campaign management. However there are downsides to consider:

Higher cost - expect to pay agency fees which could end up being a significant portion of your influencer campaign budget

Less control - brands have less direct control over the day-to-day management of the influencer relationships and content creation. This can lead to mismatches in brand alignment if the agency does not fully grasp the nuances of your brand's voice and values.
Limited transparency - agencies may not provide detailed insights into how your budget is being spent or offer in-depth analytics about campaign performance. This lack of transparency can make it difficult to measure the return on investment (ROI) and to make informed decisions about future campaigns.

Indirect creator relationships - agencies can pass along creative briefs but building personal relationships leads to better deliverables and ability to move quickly. Working through an agency can lead to a loss of personal connection with influencers, making it harder to engage directly with them later.

2) Use AP automation tools (e.g. Bill, Tipalti)

Accounts Payable (AP) automation tools are software tools designed to streamline and improve the efficiency of the accounts payable processes. These tools automate tasks involved in managing supplier invoices and payments, reducing the need for manual input and minimizing errors. Let’s get into the downsides of using AP automation software to manage and pay freelancers:

Scalability challenges - AP tools were built for B2B transactions between AP and AR functions across companies. They work well for traditional supplier relationships however start to become cumbersome when supporting large numbers of freelancers due to support required to assist with issues during onboarding and questions about payment status. Marketing typically does not have access to these systems so typically must work with finance to resolve.

Tax and compliance requirements - Automation tools help with vendor onboarding and tax paperwork (W9/ W8) collection and verification but companies are ultimately on the hook for making sure TIN submissions are correct and for filing 1099s at year end. As the number of vendors goes up, so do the hours required to process all tax paperwork. 

Cross team coordination - Bill and Tipalti are software tools built for finance teams. Often, Marketing does not have access to these tools to set up, review, approve, analyze or check the status of payouts. There are options to set up working queues and add marketing as users, however the workflow is less than ideal for teams other than finance. Additionally these tools lack integration options with marketing tools to drive automation of payouts from the influencer CRM, platform, or even spreadsheets that marketing uses as the source of truth.

3) Pay via PayPal

Many smaller companies (and some large ones) use PayPal to pay influencers and other marketing freelancers. PayPal is fairly ubiquitous as most influencers/ freelancers are able to accept payment via PayPal. As a 3rd party settlement organization, PayPal also takes on tax compliance and filing. PayPal works well to cover a few one payments (assuming you can easily expense these or the company has a PayPal account setup) but there are issues teams run into with PayPal:

Paying talent management - Paying individuals works, paying a company via PayPal is not always an option. Roughly 30% of all payments sent through Lumanu are to talent management. Especially when working with higher end talent, except to need an alternate solution for these payments.

Reporting and reconciliation - It’s difficult to sort through PayPal’s transaction history and figure out who was paid and for what. Some companies even have multiple people using different PayPal account and submitting expense reports for reimbursement which makes the process for reconciliation a complete nightmare.

Conclusion:

Working with a fintech master vendor can redefine what it means to work with freelancers as part of your marketing program. By addressing common pain points and enhancing efficiency, a master vendor can serve as an invaluable partner for businesses navigating the complexities of modern marketing. With Lumanu as a master vendor for marketing, businesses can focus on what matters most: creating impactful campaigns and delivering business outcomes.

By

Paul Johnson

May 10, 2024

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.

© 2024 Lumanu, Inc. All Rights Reserved.

Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.